Elon Musk Tweets Tesla Model Y Reveal on March 14

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Tesla (NASDAQ:TSLA) CEO Elon Musk took to Twitter again on Sunday, with another big pronouncement. This one is expected to be good news for TSLA investors — and it’s not expected to draw the ire of the SEC.

Elon Musk Tweets Tesla Model Y Reveal on March 14

Source: Tesla

According to the Tesla CEO, the company’s eagerly anticipated crossover SUV will be officially revealed on March 14. Mark that date in your calendar if you’re interested in the Tesla Model Y.

Tesla stock, which had been pounded on Friday, was up nearly 1% in pre-market trading.

Tesla Model Y to be Unveiled March 14

Elon Musk tweeted on Sunday afternoon to expect a “Model Y unveil event on March 14 at LA Design Studio.”

This isn’t just going to be a quick video or slideshow to drum up buyer interest and distract investors from issues like layoffs at the company. Musk says that detailed pricing and specs will be revealed at the event, and that rides in a Tesla Model Y will be available.

He did provide some high-level information on Sunday, tweeting that the Model Y will about 10% larger than the Model 3 and will cost “about 10% more,” and that it would have slightly less range for the same battery capacity. 

The Model Y will be the fifth electric vehicle released by TSLA.

Car Sales Have Been Slipping, But Consumers Love SUVs

U.S. car sales have dropped from the record highs hit in 2016, but there has also been a shift in consumer preferences. In particular, buyers are increasingly snapping up SUVs and trucks over cars. Ford (NYSE:F) and other automakers have been phasing out traditional passenger car sales in favor of SUVs and pickup trucks to reflect that demand. Ford’s overall U.S. sales were down 3.9% last October, but its SUV sales were up 6.7%.

Rivian seems that it will beat TSLA to the market with an all-electric pickup truck, but the Tesla Model Y will mean the company has two SUVs in its lineup. And the Model Y will be smaller and less expensive than the Model X. Both are important factors. With TSLA’s buyer tax credits winding down, price sensitivity is an issue the company is now facing. And globally, compact SUVs have been the big sellers in the category, followed by mid-size.

Will the Model Y Boost Tesla?

The Tesla Model Y is supposed to share roughly three-quarters of its components with the Model 3, which should keep costs down, and at a 10% premium the Model Y should be relatively affordable — at least more so than the Model X SUV, which currently starts at $88,000. 

Musk left himself considerable squirm room in the pricing, though. By saying the Model Y will cost “about 10% more” than a Model 3, he never said whether he was talking about the Model 3’s target $35,000 starting price — or the $60,000 that’s been the Model 3’s average selling price. That is a considerable range and the actual price is likely to have a big impact on the new SUV’s mass-market success.

The China Factor

According to The Verge, the Model Y will initially be assembled at Tesla’s Reno Gigafactory, but there are plans to eventually produce the vehicle at the factory TLSA is building in China.

That could prove to be a winning move for Tesla. China is now the world’s largest auto market, and the demand for a vehicle like the Tesla Model Y is growing fast. In 2017, demand for electric cars in China grew 82%, hitting triple digits in 2018. At the same time, sales of crossovers and SUVs grew 13%.

With the Model Y set ride both those consumer demand waves, the Chinese market could prove to be a big boost for Tesla. Assuming the current trade war with the U.S. doesn’t escalate and derail the company’s plans…

Will the Tesla Model Y boost the company’s fortunes (and TSLA stock)? 

Given the direction consumer preferences are trending, the Tesla Model Y is going to be a very important vehicle for the company. It’s likely to be critical to its success in China as well. The elephant in the room is the actual price, but we’ll have to wait until March 14 to learn that.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2019/03/elon-musk-tweets-tesla-model-y-reveal-on-march-14/.

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